Cognizant’s July-Sept quarter net up by 5.4%, maintains guidance

BANGALORE: Cognizant Technology Solutions said its sales in the July-September quarter grew by 5.4% from three months before, demonstrating that it has attained mastery over the formula of rapid growth in tough times.

At $1.9 billion (Rs 10,300 crore), sales easily topped analysts’ expectations for Cognizant’s third quarter, during which profits grew by 22%. Compared to a year ago, sales increased by 18.2%.

Despite the solid growth, the New Jersey-based company maintained its full-year revenue guidance of at least $7.34 billion, implying growth of at least 20%. In the three months to the end of the year, Cognizant expects sales to be at least $1.94 billion.

“Our consulting-led approach, intimate client relationships, deep domain knowledge and robust execution give us the confidence to deliver revenue growth of at least 20% in 2012,” CEO Francisco D’souza said in a statement.

In contrast, India’s largest software services exporter TCS grew by 4.6% in the September quarter. Others, including Wipro and Infosys, clocked sequential growth of less than 3% during the quarter. With a policy that caps margins at around 18%, Cognizant reinvests in consulting-led sales and better client engagement. It has been growing faster than most Indian IT services providers for more than a year. Although it is based in the US, most of the company’s 1.5 lakh employees are in India.

Analysts, however, were disappointed with Cognizant’s implied growth in the fourth quarter, which they said is lower than some of the Indian IT companies. “Cognizant has maintained the same full-year growth, which means the coming quarter will be slower on growth. We are expecting the growth to be around 2.6% in the coming quarter,” said Rikesh Parikh, VP for markets strategy at Motilal Oswal Securities.